Cardano: ADA Staking Upgrade Lowers minPoolCost by 50%

• The lowering of the Cardano (ADA) staking pool is geared towards attracting more participants interested in securing the network through the proof-of-stake consensus amid the mainstream adoption of web3 products.
• The Cardano Foundation supported the halving of the minPoolCost and intends to evaluate the economic impact in the coming months.

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The Cardano (ADA) network has grown to a mature DeFi network with more than $180 million in total value locked (TVL) and over $15 million in stablecoins valuation, hence requiring more participants to secure the ecosystem through its proof-of-staking (PoS) consensus.

According to the latest on-chain data, the Cardano network has about 22.98 billion in total ADA staked out of 34.9 billion in circulating supply and 45 billion units in maximum supply. The high ADA staking participation has significantly helped the network compete with other smart contract-based ecosystems like Solana (SOL), Polygon (MATIC), and Avalanche (AVAX).

Cardano Staking Parameters Lowered

On October 23, the Cardano Foundation successfully submitted a transaction on the mainnet to lower the minPoolCost staking parameter by half. As a result, the Cardano Foundation believes the lowering of the minPoolCost significantly improves the competitiveness of small pools. Moreover, more participants are expected to join the Cardano staking program, which in turn helps improve the overall security of the network as a smart contract ecosystem that supports multichain DeFi protocols.

Following the upgrade, the minPoolCost parameter has been lowered from 340 ADA to 170 ADA, which is about $47 based on the current exchange value of around $0.28. The decision to lower the Cardano minPoolCost was taken following the SPO-Poll and subsequent evaluation by the Swiss-based foundation. The company noted;

The Cardano Foundation is in favor of respecting the decision that resulted from the SPO 5 poll. Given the potential impact of these changes, we think that the recommendation of the parameter committee for a staged implementation is reasonable. We, therefore, support the halving of minPoolCost as a first gradual step, followed by an evaluation of the effects and further adaptations in Q3/Q4,

The Cardano Foundation has widely supported the initiatives to help onboard more web3 users within the ADA ecosystem amid the mainstream adoption fueled by institutional investors. Moreover, the Cardano Foundation supported 27 percent of all existing pools and 72 percent of the producing pools that cast their votes in May 2023 in favor of the SPO pool on the mainnet.

Notably, the minPoolCost initiative was introduced to the Cardano community with the mainnet activation of the Shelly hard fork in August 2020. With the minPoolCost activated, the Cardano network can be protected from Sybil attacks, a situation in which a malicious entity creates many duplicate accounts to pose as real users.

As a result of the SPO-Poll and a subsequent evaluation by the Parameters Committee, the Cardano Foundation has successfully submitted a transaction on the Cardano mainnet to lower the minPoolCost parameter from 340 to 170 ada.

Details 👇

— Cardano Foundation (@Cardano_CF) October 23, 2023

Market Implication

The Cardano ecosystem is preparing for the macro crypto bull market that is set to kick off after next year’s Bitcoin halving. With the notable developments geared towards onboarding more users to its web3 ecosystem, ADA price is projected to close the year trading above 45 cents. Moreover, more real users will be recorded on the Cardano network amid the initiatives to differentiate trading bots and humans in the AI mainstream adoption.

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